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Telecommunications deals may prove a boon for WA

BY now we’ve all heard about the bidding war that took place over Cable & Wireless Optus between Singtel and Vodafone.

It was poetic justice of a sort, since Singtel lost out on Australia’s third mobile phone carrier licence to Vodafone almost 10 years ago.

After paying $17 billion for the company, which was valued at $20 billion including debts, Singtel announced early that it would still operate all Optus’ businesses – including local and long distance phone calls, the mobile phone network and pay TV.

But it’s early days yet and nobody expected Singtel to rock the boat before finding its feet in the Australian market.

How will this affect us in the west?

There already are moves that will bring huge data bandwidth into Australia. A proposed joint venture between C&W Optus, Singtel and Telecom New Zealand will see the creation of a new telecommunications pipe between Singapore and Sydney. The cable is planned to go through Jakarta and Perth.

In theory, Perth, as a significant point of entry into Australia for a new data cable, would benefit, as almost all of the State’s data comes via Sydney. Singtel may provide the first step towards making the true connection to Asia that businesspeople and politicians past envisioned – a connection which could be the first step in making us technologically independent of the eastern states.

But how, if at all, will it affect users and providers?

Nick Morgan, new media director of a Perth advertising agency and of Internet dance music radio station, Pump 100, is positive about the possibility.

“Singtel’s our primary supplier anyway,” he said. “And we’ve had fine service from them so far.”

Mr Morgan is pleased at the promise of a closer link between countries via the merger.

“We could always do with more stable networks,” he said.

“ As a streaming audio provider the site is very bandwidth intensive. Now we have the possibility that everyone won’t have to come via Sydney.”

But should we all be worried about yet another large overseas company taking over a local?

“It’s a positive thing if Singtel has the best for Australia in mind,” Mr Morgan said, “but if they start sacking people and shutting down services, it’s a bit of a worry.”

Eftel networks chief executive officer Simon Ehrenfeld sees both sides of the coin.

“There’s a potential negative impact. It will depend on the costs of services and whether they pass on the savings they make,” he said.

“It will basically mean there’s one less competitor in the market. Maybe as a combined group they can justify more presence in WA, but both companies are guilty of having an eastern states focus.”

So far, as Mr Ehrenfeld suggests, C&W Optus and Singtel are on a separate consumer-focus footing. While Optus is very much an end-user business, much of Singtel’s business occupies the next step up the service-provision ladder (similar to the original Telecom, up until deregulation).

“It depends on what their agenda is to retail,” Mr Ehrenfeld said.

“In wholesale, which is what ISPs and content providers buy, people care about price and reliability.”

Regarding the question of foreign ownership, Mr Ehrenfeld points out a seldom-considered point in the debate – that plenty of capital flows the other way.

He cites the recent attempted acquisition of a Tasmanian ISP by Eftel that was resisted by local shareholders.

The deal was sealed when Eftel proved to users they’d provide a better service.

“We see ourselves doing overseas telco investments,” he said. “And we wouldn’t like to be restricted by things like that.”

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